Who bears the credit risk in a sharing economy?

AS THE sharing economy gains steam, there is a fundamental change in the risk profile of certain assets underway with a consequential direct impact on the financing of these assets. This may have far reaching consequences down the line if not anticipated and understood.

The two biggest capital investments that an individual makes are usually a home and a car. At the same time, these assets are not fully utilised - large portions of the homes are empty, and cars sit idle for most of the time. Software is making utilisation of these two assets more efficient and has resulted in lofty valuations of companies providing the platform for this - Uber more than US$48 billion), Gojek (more than US$3 billion), Grab (more than US$6 billion), Airbnb (US$31 billion).

One would then expect that as utilisation of an asset becomes more efficient, there would be rationalisation of assets and eventually less of them, ie fewer vehicles and fewer houses or hotels. But one has just to view the sea of green (Gojek and Grab) that greets people in front of malls in Jakarta, drivers anxiously checking their smartphones for the next ride, and the sea of blue (Bluebird) and white (Express) taxis with their own apps idling just beyond to know that the number of vehicles has actually gone up.